KOEL: OEMs recognize us for our strong engineering capabilities

Kirloskar Oil Engines Limiteds (KOEL) is present in the captive power generation and engines business for the past four decades. With its vast experience and expertise, the company is capable enough to offer applications-oriented, customized, robust and fuel efficient engines, much in sync with the Indian requirements, enabling it to create its mark in the Indian and as well as in overseas markets. No wonder why, the company continues to enjoy a major recognition with the existing on- and off-highway OEMs in India. The existing brand recognition has also enabled it to expand its business footprint among the newer OEMs looking to tap the growing Indian market, by making available indigenously manufactured cost competitive equipment, supported, mainly through locally manufactured engines. This is because the cost of fuel and serviceability of engines happens to be the prime elements of having total lifecycle cost on face of rising pressure on contractual margins. Mr. Sanjeev M. Nimkar, Vice President & Business Head, heading Power, Industrial engines and services support of KOEL spoke to P.P. Basistha on the recent demand trend and business capabilities, the company has built up allowing it to have the brand recognition.

How has been the demand of on- and off-highway construction equipment engines faring up in recent years? Which are the segments driving demand at present?

The demand of engines passed through a soft phase during 2013-14 and the first part of 2015 continued to be subdued. However, in the last four to five months, we are witnessing revival of demand in segments. Demand is being driven from transit mixers, both for the slave and power take off engines. This is owing to recent spurt in RMC industry in certain parts of the country led by demand from the infrastructure sector. The demand of engines from the earthmoving, backhoe loader and excavator segment is also showing signs of revival following its bearish phase a few years ago. The two major driving growth sectors are smaller capacities of mobile cranes and slew cranes. This is owing to the improving sales of the equipment and to commensurate capacity addition by manufacturers. Tipper trucks are also creating demand owing to movement in aggregates sector and renewed activities in mining.

What are the range of engines and ratings offered from your stable? Are the engines solely electronic or mechanical for varied in Indian requirements?

We have complete capabilities of manufacturing both electronic and mechanical engines based on the requirements of the customers. The portfolio of our electronic engines is of 15-170hp and that of mechanical engines is 170-320 hp. Eighty percent of our higher capacity engines are for off-highway and industrial applications. Backed by elaborate portfolio and expertise, we have been supplying engines to all the Indian and foreign OEMs based in India for the past four decades.

What are the inherent capabilities that have allowed you to build up the expertise to supply engines for varied applications in construction?

The capability and the expertise have been built up following our long experience in the Indian market. The edifice of capability is based on our continuous strong focus on co-engineering with the OEMs working in India. Co-engineering is being carried out to make the engines optimally suitable for the intended applications, resulting passing on value to the end users. The other capability which has been building up is manufacturing robust and fuel efficient engines, much in sync with the Indian requirements of engines being subjected to abuse. We have been dovetailing the features of robustness with making engines applications oriented allowing us create solutions for OEMs, ensuring them to manufacture stable products. This has resultantly allowing us to gain recognition with newer OEMs looking to tap the Indian market.

What about compactness and installation flexibility in sync with present generation equipment featuring more power and lesser weight ratio?

Based on growing requirements of compact engines, we are making out changes in the engine platform, with changes being carried out on power side and flywheel for installation flexibility.

How are you positioned towards making cost-competitive products?

KOEL enjoys a strong distinction of manufacturing cost competitive engines among other manufacturers. This is owing to our excellent wide vendor base across the country. Backed by sound vendor base, we're continuously upgrading our manufacturing capabilities by incorporating newer innovations. Further, we're keeping ourselves abreast with the changes in environmental norms pertaining to Bharat stage-2, 3 and 4, resultantly allowing us to deliver cost competitive and application oriented products.

Demand has been passing through extended downward cycles in recent years. In such business scenario, how are you managing your vendor base and simultaneously rolling out cost-competitive solutions?

With downward demand spirals continuing to remain extended, it has really been challenging to retain our vendor base. However, we're fortunate to offset the challenge. This is because 35% of our business is generated from power products solutions. This has been allowing us to provide assured committed business to our esteemed vendors, thereby allowing them to hedge the business risks, yet remaining profitable and cost competitive.

Owing to slow off-take of equipment, OEMs are looking for reduction of inventory. This is so as to curtail investment blockage. Being supplier of the prime component, what are the necessary interventions you have carried on your supply side for the OEMs to have minimum inventory?

On supply side, we provide 99% delivery assurances once the order is placed. Owing to this, the OEMs are not required to make any necessary forecast plan; thereby they can avoid inventories. There is no binding commitment imposed by us on the OEMs to off take the engines at a set timeframe, post placement of the orders. This provides sufficient and flexible legroom to the OEMs to acquire the equipment depending on their own feasibility.

What are the nature of onsite services support, primarily towards performance assessment and equipment restoration?

We have complete laid out provisions and processes working across 24x7 schedules to gather failure reports from sites followed by restoration and diagnosis of engines. Further, we have 400+ outlets providing cost competitive services. We also provide customized annual maintenance packages with suitable discounts.